Tag Archives: China

Beyond Tariffs: How the EU – India Free Trade Agreement Signals a New Trade Order

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The conclusion of the European Union – India Free Trade Agreement (FTA)marks a defining moment in global economic governance, drawing to a close nearly two decades of intermittent negotiations and signalling a recalibration of economic power in a fracturing global trade system. Known in press briefings as the “mother of all deals,” this comprehensive pact expands market access, slashes tariffs on a historic scale, and positions both partners to mitigate the impact of rising protectionism by third countries. This essay analyzes the pact’s economic architecture, geopolitical drivers, and implications for the broader global order.  

At the heart of the pact is an expansive liberalization of trade in goods and services. The agreement eliminates or significantly reduces tariffs on over 90% of traded goods by value, with India granting preferential access to more than 99% of Indian exports and the EU offering liberalization on approximately 97% of its exports to India. Major industrial sectors: machinery, chemicals, pharmaceuticals, medical and optical equipment will see tariff lines phased out across multi-year timetables. Special quotas and phased reductions on sensitive lines such as automobiles reflect carefully calibrated concessions designed to balance domestic political interests with international commitments; cars imported from the EU will face duties reduced from up to 110 % today to single-digit levels under an annual quota regime.  

Services and investment chapters are similarly consequential. EU firms gain enhanced access to India’s services sectors, including financial services, maritime transport and professional services, while intellectual property protections are strengthened to align Indian and European frameworks, critical for sectors reliant on predictable rights enforcement. The agreement also includes provisions for cooperation on customs procedures and dispute resolution, signalling an intent to reduce non-tariff barriers that often impede real-world commerce.  

The strategic timing of the FTA’s conclusion cannot be divorced from the changing global trade architecture. Both India and the EU have faced increasing volatility in their trade relationships with the United States, where elevated tariffs and trade tensions have disrupted traditional export patterns and encouraged market diversification. In this context, the FTA functions as a risk-mitigation strategy, reducing reliance on markets where tariff policies are unpredictable and asserting a rules-based alternative anchored in predictable market access and regulatory cooperation. For India, which currently faces tariff rates as high as 50 % in some third-country markets, the deal offers a pathway toward diversification and deeper integration into global value chains.  

Moreover, the pact reflects a broader geopolitical calculus. The EU and India together represent a market of approximately 2 billion people and a substantial share of global GDP. Strengthening bilateral economic ties serves as a hedge against the economic influence of China, and aligning regulations and standards contributes to the EU’s broader strategy of consolidating like-minded partners with robust legal and market frameworks. The agreement also dovetails with complementary FTAs, such as the UK–India deal, enhancing India’s connectivity with major advanced economies.  

Critically, the FTA embeds sustainability and regulatory cooperation into its economic architecture. Chapters addressing environmental protections, labour standards, and sustainable development aim to balance liberalized trade with social and ecological commitments. The inclusion of structured cooperation on climate action, supported by financial pledges from the EU, situates this trade pact within a broader normative framework seeking to reconcile growth with sustainability imperatives.  

Despite its ambition, implementation challenges remain. The agreement requires formal ratification by the European Parliament, member states, and the Indian Union Cabinet before entering into force. Domestic constituencies, particularly in agriculture and automobile sectors, will continue to influence the pace and contours of implementation. The phased nature of tariff reductions, especially in politically sensitive areas, illustrates the enduring tension between economic liberalization and domestic economic safeguards.  

The EU – India Free Trade Agreement represents a landmark in twenty first century trade policy. Its comprehensive coverage of goods, services, and regulatory cooperation; enacted against a backdrop of rising global tariff volatility, positions it as both an economic catalyst and a strategic bulwark within a more fragmented global trade order. As implementation unfolds, the agreement’s success will largely depend on how effectively this new architecture can foster deeper economic integration while respecting the diverse economic imperatives of its signatories.  

Sources:
Policy, outcomes and tariff details: EU–India Free Trade Agreement Chapter Summary, European Commission policy memo, 2026
India-EU FTA coverage and preferential access statistics, The Economic Times, January 2026;
Strategic context and export liberalisation figures, European Union official releases and reports, 2026;
Integration of services and sustainability provisions, policy analyses, 2026.  

Canada’s Strategic Realignment in a Fragmenting Trade Order

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The announcement of a preliminary trade agreement between Canada and the People’s Republic of China marks a consequential inflection point in the global economic architecture. After years of diplomatic estrangement rooted in the 2018 detention of Huawei’s chief financial officer and attendant reprisals, Ottawa and Beijing have agreed to reduce bilateral trade barriers through a calibrated package of tariff concessions. Canada will permit up to 49,000 Chinese-made electric vehicles to enter its market annually at a reduced tariff of 6.1 percent, a return to pre-friction levels from the 2020s. In exchange, China will sharply cut its punitive tariffs on Canadian canola seed from combined rates near 85 percent down to about 15 percent, while lifting discriminatory levies on key exports such as canola meal, lobsters, crabs, and peas. These changes are expected to unlock roughly $3 billion in new Canadian export orders and signal a thaw in a protracted trade dispute.  

This agreement emerges against a backdrop of intensifying US-China economic competition and a United States increasingly inclined toward protectionist measures. The United States maintains significant tariffs on Chinese electric vehicles and other strategically sensitive sectors, rooted in concerns about industrial policy, technological transfer, and national security. Canada’s decision to diverge from a more restrictive approach reflects both structural economic imperatives and evolving geopolitical realities. With roughly three-quarters of Canadian exports traditionally destined for the United States and less than four percent for China, Ottawa’s longstanding dependence on the US market has been a defining feature of its trade strategy. The latest negotiation illustrates a deliberate pursuit of diversification in the face of unpredictable US policy shifts.  

At the heart of this emerging alignment is a sober recognition of China’s dominant position in the global electric-vehicle and clean-technology ecosystem. China accounts for a majority share of global EV production, lithium-ion battery cell manufacturing, and solar panel capacity, a lead that Western policymakers have struggled to counteract through subsidies or industrial policy alone. By integrating Chinese EVs into the Canadian market through a regulated tariff-quota system, Ottawa positions itself to benefit from more competitive prices and accelerated adoption of low-emission vehicles, even as domestic industry voices warn of competitive displacement.  

The divergence between Ottawa and Washington on trade policy toward China carries deeper strategic significance. Historically, Canada has aligned closely with US economic and security policy, particularly within the framework of the United States–Mexico–Canada Agreement (USMCA). Canada’s recalibration suggests a growing willingness among middle powers to pursue “interest-based” engagement with Beijing that does not hew strictly to US strategic preferences. This trend is symptomatic of a broader fracturing in the global trade order, in which rising geopolitical competition has weakened the coherence of multilateral frameworks once anchored by US leadership. According to recent geopolitical scholarship, trade flows and global value chains increasingly reflect shifting alignments, with countries navigating between competing spheres of influence amid overlapping crises and supply chain stresses.  

For the United States, this development presents a diplomatic quandary. A unified North American stance on trade with China amplified US leverage in negotiations with Beijing. Canada’s independent course potentially dilutes that leverage and underscores the limits of expectation that allied economies will subordinate their economic interests to US strategic imperatives. Washington’s initial reaction has been measured but critical, framing Canada’s move as “problematic” even as it acknowledges Ottawa’s sovereign right to pursue its own agreements. Such rhetoric highlights the tension between aligning with US China-policy goals and defending national economic interests in a volatile global environment.  

At a structural level, the Canada–China deal exemplifies a broader reconfiguration of global trade relationships in an era of geopolitical competition. The traditional model of a US-centric trade order is giving way to a more multipolar economic landscape in which regional power centers and bilateral arrangements exert greater influence. Emerging trade partnerships, whether in clean technology, agriculture, or energy cooperation, reflect pragmatic calculations by states seeking stability, market access, and technological advantage. The interplay between geopolitical alignment and economic policy suggests that future trade patterns will be shaped less by universal norms and more by strategic hedging, selective engagement, and competitive statecraft.

In this context, the Canada–China agreement serves as both a practical economic arrangement and a geopolitical signal. It indicates an era in which middle powers aspire to greater autonomy in foreign economic policy, navigating between competing great powers and recalibrating long-standing alliances to safeguard national interests within a fragmented system of global trade.

Australia: The Prize No One Talks About

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There’s a story playing out on the world stage that barely makes a ripple in most media cycles. While the headlines fixate on Ukraine, Gaza, or Taiwan, an unspoken contest is quietly unfolding for influence over a country that has, for too long, been treated as a polite and distant cousin in global affairs: Australia.

We’re used to thinking of the United States as having eyes on Canada, economically, culturally, and strategically. The integration is old news: NORAD, pipelines, the world’s longest undefended border, and the quiet assumptions of shared destiny. But if you really want to understand the next chapter of global power politics, don’t look north. Look west. Look south. Look to Australia.

What’s emerging now is not a scramble for land or flags, but for strategic intimacy, a deep intertwining of interests, logistics, defense capabilities, and ideological alignment. Australia is the prize not because it’s weak, but because it’s vital: geographically, economically, and politically.

The American Pivot
The United States is already entrenched. Through AUKUS, it has committed to helping Australia build nuclear-powered submarines and integrate into the U.S. military-industrial supply chain. But this is more than just a defense pact. It’s about locking Australia into a security and technology architecture that positions it as a forward base for U.S. naval and cyber operations, a southern anchor against Chinese ambitions in the Indo-Pacific.

What few people understand is this: Australia is becoming America’s new front line. Not in the sense of war, but in the grand strategy of containment, deterrence, and projection. The U.S. doesn’t want Australia as a vassal, it wants it as a platform, a co-pilot, a bulwark. In many ways, it’s happening already.

India Enters the Frame
But Washington isn’t the only capital watching Canberra. New Delhi is quietly but deliberately courting Australia too, not for bases, but for bonds.

India sees Australia through a different lens: not as a strategic outpost, but as an extension of its civilizational, economic, and diasporic reach. With a large and growing Indian community in Australia, rising trade links, and joint naval exercises in the Indian Ocean, India’s interest is long-term and layered.

What India understands, and what many in the West overlook, is that Australia is a natural expansion point for a rising democratic Asia. It’s a source of energy, food, space, and credibility. In a world where climate instability and resource scarcity are redefining security, having Australia in your corner isn’t optional. It’s essential.

Why It Matters
This isn’t a turf war. It’s not a return to Cold War blocs. It’s more fluid than that, a web of influence where infrastructure, education, culture, and soft power matter just as much as tanks and treaties.

The real story is this: Australia is shifting from the periphery to the center of global strategic thought. It’s no longer just “down under.” It’s at the crossroads of the world’s most dynamic (and dangerous) geopolitical contest: the one unfolding across the Indo-Pacific.

And here’s the kicker: Australians are waking up to this. The era of benign non-alignment is over. The decisions they make in the next decade, about alliances, sovereignty, and identity — will echo far beyond their shores.

So the next time someone tells you it’s all about Europe or the South China Sea, remind them: The most consequential strategic competition of the 21st century might just be quietly unfolding in the sunburnt country; and it’s not just China who’s watching. The U.S. and India are, too. And they both want Australia in their future.

North America’s Strategic Choice: Integration or Irrelevance in a Multipolar World

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As the global trade landscape shifts, alliances such as BRICS and infrastructure developments like the International North-South Transport Corridor (INSTC) are redrawing the map of commerce. These projects are not just economic arrangements, they are strategic assertions of a multipolar world, where emerging economies are building financial systems and trade networks that bypass traditional Western-dominated institutions. In this changing environment, deeper integration across North America is no longer just desirable, it is essential. The United States, Canada, and Mexico share geography, economic interdependence, and complementary strengths. But instead of leaning into this partnership, the U.S. has at times acted in ways that undermine its closest allies, and in doing so, it is undercutting its own long-term strategic interests.

BRICS, now expanded to include nations like Egypt and the UAE, is working toward reducing reliance on the U.S. dollar and building alternative financial infrastructure. Simultaneously, the INSTC, a 7,200-kilometre multimodal corridor linking India, Iran, Russia, and Europe, offers a faster and cheaper trade route than the Suez Canal. These shifts are enabling new alignments between Asian, Eurasian, and Global South nations. In contrast, the U.S. risks being left behind unless it reinvests in its regional relationships. North America, bound by the Canada-United States-Mexico Agreement (CUSMA), already possesses a solid legal and regulatory foundation. What is missing is the political will to push that foundation into a fully integrated economic zone.

Closer North American integration could strengthen supply chains, enhance competitiveness, and boost regional innovation. Mexico’s manufacturing power, Canada’s resource wealth and technological expertise, and the U.S.’s financial and consumer might together could create a resilient and globally influential economic bloc. However, protectionist impulses from Washington, such as tariffs on Canadian aluminum, trade disputes over softwood lumber, and threats against Mexican imports, erode trust. These actions push Canada and Mexico to expand trade elsewhere, increasing their engagement with China, the EU, and the Asia-Pacific. While diversification is strategically wise, a fragmented North America plays directly into the hands of BRICS and INSTC-aligned actors.

Still, for Canada and Mexico, investing further in North American integration remains the most strategically sound choice. Despite political turbulence, the U.S. offers unmatched access to capital, consumer markets, and legal protections. CUSMA provides a rules-based framework that supports long-term stability more effectively than newer or looser trade deals. And while deeper trade ties with China or Europe may offer short-term gains, they cannot replicate the geographic, cultural, and logistical synergies of the North American relationship. Rather than turning outward in frustration, Canada and Mexico can use their economic leverage to influence U.S. trade policy from within, helping to shape a trilateral vision rooted in shared democratic values and mutual prosperity.

The U.S., for its part, must recognize that its global position depends not just on military strength or Silicon Valley innovation, but on the strength of its closest partnerships. The path forward lies not in undermining allies, but in building with them a regional powerhouse capable of competing with the rising multipolar world. Failing to do so means ceding both economic and geopolitical ground – to rivals who are already moving with speed and purpose.

🛡️ NATO & Allied Countries Shifting Away from U.S. Defense Equipment

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Several NATO and allied countries have recently rejected or are reconsidering U.S.-made military equipment in favor of European or domestic alternatives. This trend reflects a broader shift toward defense autonomy, industrial sovereignty, and reduced reliance on U.S. service contracts.

🇩🇰 Denmark

  • Air Defense: Opted for the Franco-Italian SAMP/T NG long-range system over the U.S.-made Patriot missile system, citing high costs and long delivery times. Denmark is also considering European alternatives like NASAMS, IRIS-T, and VL MICA for medium-range needs.
  • Arctic Exercises: Led the “Arctic Light 2025” military exercise in Greenland without U.S. participation, emphasizing regional leadership and reducing reliance on U.S. forces.

🇪🇸 Spain

  • Fighter Aircraft: Rejected U.S. F-35 proposals in favor of European options like the Eurofighter Typhoon and the Future Combat Air System (FCAS), aiming to bolster European defense autonomy and reduce dependence on U.S. military technology.

🇵🇹 Portugal

  • Fighter Aircraft: Reconsidered plans to replace aging F-16s with U.S.-made F-35s, exploring European alternatives to enhance operational control and reduce long-term dependency on foreign suppliers.

🇩🇪 Germany

  • Air Defense: Prioritized domestic production and local sustainment for tanks, artillery, and aircraft, including the Leopard 2 tank upgrades and Eurofighter Typhoon programs, to maintain control over maintenance and modernization capacities.

🇳🇱 Netherlands

  • Naval Platforms: Emphasized European suppliers for submarines and frigates, negotiating co-production and local sustainment agreements to reduce reliance on U.S. shipyards.

🇳🇴 Norway

  • Fighter Jets & Patrol Aircraft: Pushed for domestic assembly lines and local maintenance hubs, limiting dependence on American contractors for lifecycle support.

🇮🇹 Italy

  • Naval & Aerospace Systems: Invested in domestic shipbuilding and aerospace industries, including the FREMM frigate and domestic drone programs, while seeking interoperability standards that avoid long-term U.S. service dependencies.

🇨🇦 Canada

  • Submarine Procurement: Rejected U.S. proposals for new submarines, opting instead for bids from Germany and South Korea to gain autonomy over maintenance, lifecycle upgrades, and operational decision-making.
  • Fighter Aircraft: Evaluating Swedish fighter jets with plans for domestic assembly and maintenance, aiming to reduce reliance on U.S. contractors.

🇫🇮 Finland

  • Military Cooperation: Despite broader U.S. plans to scale back military operations in parts of NATO’s eastern flank, Finland maintains that its military cooperation with the United States is not being reduced. Finnish Defence Minister Antti Hakkanen affirmed that the U.S. remains committed to deepening bilateral defense efforts.

🇫🇷 France & 🇮🇹 Italy

  • NATO Arms Deal: Opted out of a new NATO-led initiative to finance the delivery of U.S. weapons to Ukraine, signaling a preference for European solutions and a move towards greater defense autonomy.

🔄 Broader Trends Influencing These Shifts

  • Cost & Delivery Timelines: U.S. defense systems like the Patriot missile system often face long production backlogs and higher costs, prompting NATO allies to seek more timely and cost-effective European alternatives.
  • Industrial Sovereignty: Countries are increasingly prioritizing local or regional production and maintenance capabilities to maintain control over their military assets and reduce dependence on foreign suppliers.
  • Political Tensions: Diplomatic strains, such as disagreements over Arctic territories and defense spending, have influenced countries like Denmark to reconsider their reliance on U.S. defense equipment.
  • Strategic Autonomy: The desire for greater control over defense decisions and capabilities is driving NATO allies to explore European solutions that align with their national interests and security priorities.

Allies Reclaiming Autonomy: The Growing Shift Away from U.S.-Made Military Equipment

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Across NATO and allied nations, governments are increasingly rejecting U.S. defense options or cancelling long-term contracts, favoring domestic or European alternatives that offer control over manufacturing, maintenance, and upgrades.

For decades, the United States has dominated the global defense market, especially among NATO allies. Its model, sell advanced platforms, then tie buyers into decades of maintenance, upgrades, and proprietary service, has been remarkably profitable and politically influential. But that model is under pressure. Increasingly, U.S. allies are saying no: rejecting American options, cancelling planned contracts, or shifting to alternatives that offer greater operational and industrial autonomy.

Spain provides a recent example. While the country had previously considered U.S.-made platforms to modernize its air force, Madrid has turned toward European options such as the Eurofighter Typhoon and the Future Combat Air System. Officials cited cost, supply chain control, and the desire to retain domestic and European industrial participation as key drivers. Similar reasoning is guiding Portugal, which has reconsidered its replacement programs for aging aircraft, leaning toward European-built fighters rather than committing to U.S.-supplied F-35s.

Denmark illustrates the trend in air defense. In its largest-ever defense procurement, the Danish government opted for the Franco-Italian SAMP-T NG long-range system over the U.S.-made Patriot, citing both cost and delivery time. Denmark is also reviewing medium-range options from European manufacturers, emphasizing local or regional production and maintenance. This choice reflects the dual desire to strengthen European defense capabilities while reducing reliance on U.S.-based service contracts.

Other NATO members are making comparable moves. Switzerland, historically neutral, has expressed reservations about joining long-term U.S. programs, including the F-35, instead evaluating European alternatives that allow for national control over lifecycle management. Norway has similarly emphasized local assembly and domestic sustainment for fighter and patrol aircraft. The Netherlands, Belgium, and Greece have all shown interest in European or domestic solutions for naval, air, and missile systems, explicitly seeking contracts that do not lock them into decades-long U.S. maintenance agreements.

These choices reflect a broader strategic and economic calculation. U.S.-made systems, while technologically advanced, often require buyers to accept a near-perpetual dependency on American contractors for upgrades, parts, and service. Allies are increasingly reluctant to cede that control, recognizing that operational autonomy and local industrial development are critical to national security. European manufacturers, by contrast, are offering co-production, local assembly, and technology transfer that allow countries to maintain both sovereignty and economic benefit from defense programs.

The implications for the U.S. defense industry are substantial. Losing planned contracts or having allies cancel or decline U.S.-made systems threatens billions in revenue, particularly from the lucrative long-term service and maintenance components. Strategically, it reduces Washington’s leverage: allies that control their own equipment are less subject to subtle influence through supply and upgrade dependencies. Over time, the cumulative effect could reshape the defense-industrial landscape in Europe and beyond, challenging the assumption that U.S.-supplied hardware will dominate allied inventories.

Canada, with its submarine program and proposed Swedish fighter deal, stands as the most prominent example, but it is hardly alone. Across Europe and NATO, governments are asking whether reliance on U.S. contractors for decades-long service agreements is compatible with modern defense priorities. The answer increasingly appears to be “no.” Allies want control over manufacturing, maintenance, and upgrades, and they are willing to bypass traditional U.S. options to achieve it.

In short, the U.S. model of “buy once, pay forever” is losing favor. NATO members and other allies are embracing autonomy, local industrial participation, and diversified procurement, signaling a shift that could reverberate across global defense markets for decades. The message is clear: even America’s closest partners are no longer content to surrender operational control and economic benefit for decades-long contracts that primarily serve U.S. industry.

Canada and Mexico Forge Strategic Partnership: Implications for North America

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On September 18, 2025, Canadian Prime Minister Mark Carney and Mexican President Claudia Sheinbaum signed a comprehensive strategic partnership in Mexico City. This agreement, covering 2025–2028, aims to deepen economic, security, and environmental collaboration between Canada and Mexico, explicitly anticipating the 2026 review of the United States-Mexico-Canada Agreement (USMCA). While the immediate bilateral effects are evident, the agreement also carries broader implications for the three major North American economies: Canada, Mexico, and the United States.

Scope and Focus of the Agreement
At its core, the agreement establishes a four-year bilateral action plan encompassing four pillars: prosperity, mobility and social inclusion, security, and environmental sustainability. Economically, it focuses on expanding trade and investment in infrastructure, energy, agriculture, and health, while jointly developing critical infrastructure such as ports, rail links, and energy corridors. In security, it aims to strengthen border control and combat transnational crime. The environmental and sustainability component is particularly notable, signaling both countries’ intent to collaborate on climate mitigation and resource management.

Strategic Context
The timing of this agreement is significant. Earlier in 2025, both Canada and Mexico faced tariffs and trade frictions with the United States, creating a strategic impetus to solidify bilateral cooperation. This partnership may serve as a hedge against future unilateral U.S. trade measures and positions both nations more strongly for upcoming negotiations surrounding the USMCA review in 2026. By consolidating economic, security, and environmental frameworks bilaterally, Canada and Mexico signal that they can act decisively and collaboratively independent of U.S. alignment, while still committing to trilateral engagement.

Implications for Canada
For Canada, the agreement represents a proactive diversification of trade and investment partnerships within North America. Beyond the U.S., Mexico is an increasingly significant market for Canadian goods and services, particularly in energy and infrastructure. By reinforcing bilateral economic ties, Canada gains leverage in upcoming USMCA discussions and reduces its vulnerability to unilateral U.S. trade policy shifts. Moreover, collaboration on climate and sustainability initiatives positions Canada as a leader in cross-border environmental governance, complementing its domestic commitments.

Implications for Mexico
For Mexico, the agreement strengthens its economic and geopolitical options. Mexico has historically balanced trade and diplomatic relationships with the United States while seeking alternative partners. Formalizing a strategic partnership with Canada enhances Mexico’s negotiating position with the U.S., particularly as the USMCA review approaches. Joint infrastructure projects and investment commitments also promise to accelerate Mexico’s industrial and energy development, potentially boosting domestic employment and technology transfer.

Implications for the United States
For the United States, the Canada-Mexico agreement presents both opportunities and challenges. On one hand, stronger integration between Canada and Mexico may facilitate smoother trilateral cooperation, reducing friction in cross-border commerce and security. On the other hand, it could limit U.S. leverage in bilateral negotiations with either country if Canada and Mexico present unified positions during the USMCA review. The U.S. may need to consider the strategic consequences of any unilateral trade actions in light of this growing North American solidarity.

The Canada-Mexico strategic partnership represents a calculated, forward-looking approach to regional stability and prosperity. While the agreement strengthens bilateral ties, it also reshapes the dynamics of North American relations, providing both Canada and Mexico with enhanced economic and strategic agency. For the United States, it signals a more integrated northern and southern neighbor bloc, emphasizing the importance of collaborative rather than confrontational engagement. As the 2026 USMCA review approaches, all three nations will likely navigate a more complex and interdependent landscape, where trilateral cooperation becomes not only beneficial but essential.

Sources:
• Reuters. Canada and Mexico committed to shared partnership with US, Carney says. September 18, 2025. link
• Politico. Mexico and Canada make nice ahead of high-stakes trade talks. September 18, 2025. link
• Global News. Carney, Sheinbaum sign strategic partnership to boost trade, security, environment. September 18, 2025. link

AUKUS Update: Trump’s Price Hike and the Shadow of a Sovereignty Clause

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This post is an update on the AUKUS saga that I wrote about, back in May 2025. Do you think the Australians are wishing they had stuck with their agreement with the French? 

AUKUS: Australia’s Submarine Mirage and the Real Estate Windfall for the US and UK

As the ink dries on Australia’s multi-decade submarine commitment under the AUKUS pact, new political winds out of Washington are shaking the foundations of what Canberra once saw as a strategic guarantee. Under the returning Trump administration, the U.S. is pushing to renegotiate the financial terms of the agreement and is reportedly seeking to insert a wartime control clause, raising fresh concerns about Australia’s sovereignty and strategic independence.

The heart of the issue is money. While Australia has already pledged over US$500 million to help expand U.S. submarine production capacity, Trump’s team is now demanding far more, up to US$2 billion in new payments, as a condition to secure delivery of three to five U.S. Virginia-class nuclear submarines from 2032 onward. These funds would be directed to bolster American shipyards, particularly in Virginia and Connecticut, which remain overextended and under pressure to deliver on U.S. Navy contracts.

The financial squeeze isn’t the only concern. Reports have surfaced in The Australian and News.com.au that a so-called “China clause” may be under quiet negotiation. This clause would give the U.S. the right to reclaim or restrict Australian use of the submarines during a major conflict, particularly one involving China. While the Pentagon has not confirmed the existence of such a clause, the possibility alone has ignited alarm among Australian defense experts and former leaders.

Former Prime Minister Malcolm Turnbull, an early critic of the AUKUS pact, warned that the submarine deal risks becoming a one-sided arrangement in which Australia pays heavily to host, maintain, and eventually crew American subs, without ever holding true operational control. Bob Carr, another former senior figure, was blunter: if the clause is real, it would render Australia’s billion-dollar fleet a “rental service” for U.S. war planners.

Current officials, including Defence Minister Richard Marles, have sought to play down the growing controversy. He insists the U.S. review is “routine” and that Australia remains committed to the AUKUS vision. But behind closed doors, pressure is mounting. Canberra must now decide whether to comply with the new financial demands and legal caveats—or begin preparing for a prolonged diplomatic standoff.

Meanwhile, in the U.S. and U.K., the shipyards and surrounding real estate markets continue to benefit from AUKUS-linked investments. The U.S. gains not only geopolitical leverage but a quiet economic windfall, as the influx of Australian capital fuels job creation and property demand in key production zones like Newport News, Virginia and Barrow-in-Furness in the UK.

What began as a trilateral alliance of equals now looks increasingly like a bargain between a landlord and tenant, with Australia footing the bill for the privilege of being an American ally. As the strategic calculations shift and Trump’s transactional style returns to the global stage, Australia’s AUKUS submarines may be powerful, but only if Canberra retains the keys.

Sources:
• News.com.au
• The Guardian
• The Washington Post
• The Australian
• Economic Times

Five Things We Learned This Week

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Here’s the latest edition of “Five Things We Learned This Week” for July 5–11, 2025, featuring all-new insights within the past seven days—no repeats from previous lists:

⚖️ 1. Trump Intensifies Trade War with 30–50% Tariffs

  • Between July 7–11, President Trump sent letters threatening 30% tariffs on EU & Mexico (starting Aug 1), 35% on Canada, and 50% on imported copper, along with an extra 10% on BRICS allies  .
  • Global markets responded with caution—stocks dipped, safe-haven assets steadied, and commodity currencies showed volatility  .
  • Trade partners expressed strong concern, calling the moves disruptive amid ongoing negotiations  .

🛢️ 2. Oil Prices Jump Over 2% amid Tight Markets and Tariff Fears

  • On July 11, Brent rose ~2.5% ($1.72/barrel) to $70.36, and WTI climbed 2.8% to $68.45, sparked by IEA warnings of tighter supply, OPEC+ compliance, and trade policy risks  .
  • U.S. rig counts fell for the 11th straight week, intensifying concerns about future output ().

🌍 3. UN Adopts Climate–Human Rights Resolution

  • On July 8, the UN Human Rights Council passed a climate change motion that ties environmental harm to human rights—adopted by consensus after the Marshall Islands withdrew a controversial fossil-fuel phase-out amendment  .
  • The resolution calls for “defossilizing our economies” and sets a benchmark for framing climate action as a global human-rights priority  .

💼 4. BRICS Summit Highlights Climate Funding Demands

  • On July 7, at their Rio meeting, BRICS leaders urged wealthy nations to fund climate transitions in developing countries, while also affirming continued fossil fuel usage in their economies  .
  • Brazil’s President Lula warned against denialism, contrasting BRICS multilateralism with U.S. isolationism ().

🎤 5. Reuters NEXT Asia Summit Tackles Trade, AI & Global Stability

  • July 7, the Reuters NEXT Asia forum in Singapore convened ~350 global leaders to debate pressing issues—covering AI innovation, trade disputes, and geopolitical uncertainty  .
  • Discussions stressed AI’s dual potential for disruption and opportunity, with trade tensions—especially tariffs—looming large.

Each of these five highlights occurred between July 5–11, 2025, and brings fresh, global perspectives to this week’s roundup. Want full article links or deeper analysis? Just say the word!

The BRICS Strategy in 2025: From Dialogue to Direction

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In July 2025, the BRICS nations – Brazil, Russia, India, China, South Africa, and an expanded circle now including Egypt, Ethiopia, Iran, Saudi Arabia, the UAE, and Indonesia, met in Rio de Janeiro for their 17th annual summit. The gathering marked a decisive shift from rhetorical ambition to institutional strategy, as the bloc attempts to redefine global governance, build financial alternatives to the West-led systems, and frame itself as the political voice of the Global South. While the summit was shaped by ongoing geopolitical crises and internal contradictions, it revealed a maturing vision that extends far beyond its original economic coordination mandate.

At the core of this year’s summit was a demand for structural reform in global governance. BRICS leaders called for the United Nations Security Council to be expanded and for the voting structure of institutions such as the International Monetary Fund (IMF) and World Bank to be reweighted to better reflect the global South’s demographic and economic realities. This long-standing frustration with Western-dominated institutions has now sharpened into a diplomatic agenda. What was once a diffuse critique has evolved into coordinated proposals, particularly on the economic front.

One of the summit’s central themes was the steady progress toward de-dollarization. While calls for a BRICS common currency were conspicuously downplayed in Rio, leaders focused instead on more pragmatic steps: local-currency trade settlements, expanded use of central bank digital currencies (CBDCs), and the interoperability of national payment systems through the still-developing BRICS Pay infrastructure. A new cross-border clearing and settlement framework, informally called BRICS CLEAR, was introduced to complement these efforts. These initiatives are designed not only to bypass the U.S. dollar in bilateral and multilateral trade, but also to shield BRICS economies from the volatility and political conditionality associated with Western sanctions and SWIFT-based systems.

To support these ambitions, the New Development Bank (NDB), already capitalized with billions of dollars from member states, is being repurposed. A guarantee facility is in development, modeled loosely on the World Bank’s Multilateral Investment Guarantee Agency (MIGA), to underwrite public and private projects across member states. This is particularly relevant for emerging markets seeking infrastructure finance without the governance conditions typically imposed by the IMF or World Bank. With these tools, the bloc seeks to develop its own version of Bretton Woods-style architecture, updated for multipolar geopolitics.

Climate and sustainability also featured heavily on the summit agenda. Brazil, as host, proposed the “Tropical Forest Forever Facility,” a $125 billion climate financing mechanism aimed at conserving rainforest regions across Latin America, Africa, and Asia. The proposal is a direct challenge to Western narratives that have often placed environmental responsibility solely on the shoulders of developing nations without matching financial commitments. The initiative also serves as a preview of the Global South’s priorities heading into COP30, which will also be hosted by Brazil.

Sustainable development received structural attention beyond climate. The BRICS Business Council and Women’s Business Alliance jointly launched a 2025–2030 action plan focused on strengthening small and medium-sized enterprises (SMEs) across member states. This includes access to digital markets, cross-border licensing, and gender-equity strategies in entrepreneurship. The bloc appears intent on grounding its geopolitical ambitions in concrete developmental outcomes at the community and enterprise level.

Notably, the summit also launched a framework for artificial intelligence governance. Although still in early stages, the agreement seeks to establish common principles around transparency, ethical use, and protection against algorithmic bias. This aligns with recent UN discussions and serves to position BRICS as a rule-setting body rather than just a rule-taking coalition. With China and India both advancing in AI development, and with Brazil and South Africa playing increasing roles in data regulation, this initiative represents an important test of cross-ideological cooperation in technology governance.

Despite these achievements, internal tensions were evident. Neither President Xi Jinping nor President Vladimir Putin attended in person. India’s leadership walked a diplomatic tightrope, supporting reformist language while resisting deeper integration that might conflict with its ties to the West. Brazil, under President Lula, tempered the bloc’s anti-Western tone, particularly around tariffs and NATO criticism, wary of provoking trade retaliation. These divergences underscore the coalition’s central contradiction: it is an alliance of ambition, not ideology.

Nonetheless, BRICS continues to expand. Indonesia became a full member in January 2025, joining Iran, Egypt, Ethiopia, and others admitted in the prior year. Observers note that the group’s size risks diminishing its coherence, yet the appeal of a multipolar forum remains strong. As the G7 struggles with internal disunity and the Western alliance faces political upheaval, BRICS offers a platform that aligns with the aspirations of many developing nations, even if it cannot yet match Western institutions in capacity or cohesion.

Looking ahead, the bloc’s short-term focus will be on operationalizing its financial and development tools, settlement systems, climate funds, SME supports, and asserting diplomatic pressure for reform in global governance bodies. Over the medium term, its success will depend on the extent to which it can balance economic pragmatism with political heterogeneity. While its vision of a multipolar world is not universally embraced, BRICS has matured into a serious force in global affairs, one increasingly capable of setting its own agenda.